- by foxnews
- 25 Nov 2024
As TikTok, the world's most popular app, comes under increasing scrutiny in response to data privacy and security concerns, lawmakers in the west may soon set their sights on other Chinese platforms that have gone global.
TikTok was built by ByteDance as a foreign version of its popular domestic video-sharing platform, Douyin. But it is far from being ByteDance's only overseas moneymaker. The Chinese company owns dozens of apps that are available overseas, many of them English-language versions of Chinese offerings.
CapCut is a video-editing app that is used by TikTok creators, while Lark is a workplace collaboration platform. Other apps, particularly e-commerce platforms such as Shein, have become hugely popular in the US and the UK.
The US Congress is now considering the introduction of the Restrict Act, which would give the commerce department the power to ban TikTok and other apps that pose national security risks. Because the main concern about Chinese apps is that they are subject to interference from the Chinese Communist party, many household names could soon be in the line of fire.
CapCut is the Chinese version of ByteDance's JianYing. It was the fourth-most downloaded app globally in 2022, behind TikTok, Instagram and WhatsApp, according to Statista, which analyses market and consumer data.
Despite the security concerns over TikTok, governments have said little about CapCut. India's government is an outlier, banning the app in 2020 along with a host of others made by Chinese companies.
First released in April 2020, CapCut has been downloaded more than 500m times on the Google Play store globally. On Apple devices, it was downloaded 25m times just last month, according to data analysts Sensor Tower. At times in 2021, CapCut was the most downloaded free app in the US.
Lark, a workplace collaboration platform, launched in 2019. Its Chinese version is called Feishu, but the two platforms operate and store data separately, with Lark being managed from Singapore.
It has already launched in the US, south-east Asia and Japan, and has plans to expand into Europe. Its target audience is multinational companies that work with China, or Chinese companies working overseas.
Lark combines elements of Slack, Dropbox, Google Docs and Skype. It is a minnow compared with ByteDance's other products, but is part of a strategy to diversify the company's offering.
Now, however, Lark's future looks uncertain. It explicitly deals with the kind of proprietary data that western lawmakers and companies would want to keep secure. Ivy Yang, a China tech analyst who previously worked for tech firm Alibaba, said that, for years, Chinese apps pursued a strategy of developing "under the radar" before being discovered more widely. But, Yang said, "that trajectory has to shift because the American government doesn't allow them to do that any more".
Tencent's WeChat - which has more than 1.1 billion users - is overwhelmingly used in China, where the all-encompassing app is essential for communications, bookings, finances, and even health monitoring during the pandemic.
But it is popular in other countries, too, particularly for diaspora communities wanting to keep in touch with friends and family back in China. Disinformation is particularly rife on WeChat, in part because news spreads in private chat groups rather than on public feeds, so is harder to monitor.
In 2022, it was downloaded more than 66m times in China, about 2.1m times in both the US and Indonesia, and more than 1m times in Malaysia, Vietnam and Taiwan.
In September 2020, the then US president, Donald Trump, sought to ban WeChat and TikTok outright. This led to lawsuits and court-ordered stays on the ban, and in 2021 his successor, Joe Biden, withdrew Trump's executive orders. Biden's administration also launched national security reviews of apps created by companies with links to adversarial foreign governments such as China.
WeChat is a Chinese-made app also used in the west, unlike TikTok, CapCut and others, which are western versions of Chinese apps. In 2021, WeChat said it had separated processes for its domestic Chinese users and those who log in with a foreign phone number.
But in September last year, overseas users received pop-up messages warning them that "personal data [including] likes, comments, browsing and search history, content uploads, etc" would be stored on Chinese servers.
Shein, pronounced "shee-in", is the world's largest fashion retailer. Founded in 2008 in Nanjing, last year it was the most-downloaded fashion and beauty app in the US, with more than 27m downloads, according to Statista.
Consumers are turning to Shein because it is cheap. But, said Yang, it is also "a lot more fun". Chinese e-commerce apps are "a lot more engaging", with pop-ups offering discounts and deals to gamify the shopping experience.
Despite the cheap prices, its revenues are huge. In 2022, it raked in $22.7bn (£18.2bn), putting it in the same league as established behemoths such as H&M and Zara. Rui Ma, a China tech analyst and investor, said that Shein's core advantage was its supply chain. Unlike other fashion companies, Shein works directly with the material suppliers and factories, so it has a detailed understanding of its own pipeline. Ma said Shein's inventory waste "is one-10th that of the industry average", which allowed it to keep prices down.
Temu only launched in the US in September 2022, but by January this year it was the most popular app in the country. The e-commerce platform sells everything from wireless earphones for $5.09 to a cat's toothbrush for $0.44.
Its inventory is a core part of its business model: it prioritises lightweight products to reduce cargo costs, and ships to consumers directly from factories in China. This allows it to offer rock-bottom prices. It also requires vendors to offer products that are not available on other platforms.
It is a subsidiary of PDD Holdings Inc, a Chinese company that also owns the Chinese internet retailer Pinduoduo. Pinduoduo is the dark horse of the Chinese e-commerce market. Despite being much younger than Alibaba and JD.com, which dominate the industry, Pinduoduo has about 15% of the market share. Ma said PDD had "a team that is really good at execution, and they're taking a lot of the Chinese advantages, and their knowhow, into expanding abroad".
Yang also notes that with US consumers being increasingly cash-strapped, they are willing to wait longer - Temu's delivery times can be one to two weeks - for cheaper products. That is a challenge for US giants such as Amazon, which have prioritised speed of delivery above all else.
Last year AliExpress, the online marketplace of the tech giant Alibaba, was the third-most popular marketplace app in the UK, with 1m downloads, behind Amazon and eBay. Rather than working directly with factories, it connects small businesses in China with consumers around the world to sell cheap products, often in bulk.
However, despite being backed by China's leading e-commerce platform, AliExpress has failed to catch on in the west as successfully as newer rivals such as Temu and Shein. Yang said part of the reason for this was that it didn't have the "laser focus" of its competitors. Yang said that AliExpress "was never really under pressure to thrive" in the west because Alibaba already had so many arms to its business, including Taobao, for shopping, and Alipay, a mobile payments system that is ubiquitous in China.
In theory, many of the accusations that have been levelled against TikTok - such as that it is bad for children's mental health or engages in censorship of political topics - should be less applicable to other Chinese apps that are popular in the west. Fast fashion and cheap cosmetics are less controversial than algorithmically delivered content that is seen as shaping young minds. And shopping apps like Temu and Shein are dependent on physical supply chains, so they are less able to change or mask their Chinese links.
But US lawmakers have warned that any Chinese-owned apps could be vulnerable to data privacy breaches or interference from the Chinese Communist party.
Some analysts have pointed out that the US does not have comprehensive data privacy laws, meaning that users of any apps have little control over how their data is used.
Ma said: "It doesn't make much sense to me that a shopping app is going to be put on the same level [of scrutiny] as a media app. But my view is that it's not going to stop anyone from trying."
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